Tax expert, Geoferry Kabutey Ocansey, has averred that the tax exemption regime in Ghana has not been transparent.
Mr. Ocansey, who is the Executive Director of Revenue Mobilisation Africa, believes that unlike other countries where their regimes are done transparently with a positive impact on their economies, Ghana is the opposite.
He said the Ministry of Finance does not have any track record of the companies that benefited from tax exemptions, the progress they have made, or the current state of the businesses.
Speaking on Frontline on Rainbow Radio 87.5FM, “I can beat my chest and tell you that the Ministry of Finance does not have this type of tracking system for the businesses that have benefited from tax exemptions”.
He told host Kwabena Agyapong that Ghana has been granting tax exemptions for years and getting virtually nothing in return.
“It would be prudent for us to pause and rethink the exemptions, which are a drain on our resources. Sometimes, tax exemptions are granted without parliamentary approval,” he stated.
Meanwhile, the World Bank has raised concerns over the significant impact of tax exemptions on Ghana’s revenue generation capabilities.
The World Bank argues that the country’s tax system is underperforming due to a multitude of tax reliefs that substantially narrow the corporate income tax (CIT) base.
The 8th Ghana Economic Update by the World Bank revealed that Personal income tax (PIT) accounts for about 15.0% of Ghana’s total tax revenues, below Sub-Saharan Africa’s (SSA) average of 18.0%).
As of 2020, Ghana’s PIT take was equivalent to 2.0% of GDP (against the SSA average of 3.5 per cent), leaving a gap between the country’s actual and potential PIT revenue equal to more than 2.0 of GDP.
Payroll taxes also accounted for more than 99.0% of total PIT proceeds.
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